Individual Bankruptcy When individuals find that the financial circumstances in their lives have gotten unmanageable and debts far exceed income, one option that they may select is filing for personal bankruptcy. Although this may temporarily help with situation, there are also real, long-lasting consequences to filing for bankruptcy that also need to be considered. Consider the following scenario: Mary is a 30-year-old divorced woman. She got married at the age of 25, was married for approximately 4 years, and currently has a 3-year-old child. Mary is a financial analyst who earns approximately $60,000 per year. She has a combination of loans, credit card debt, and medical bills totaling $88,000. Her assets are worth $24,000. After reviewing this information, respond to the following: In general, what options are available to an individual in filing bankruptcy? What might affect the availability of these options for Mary? What other factors might Mary want to consider in making her decision to file bankruptcy? What recommendation would you make to Mary and why? With these thoughts in mind: Post an initial statement by Day 3 that expresses your thoughts on pursuing backruptcy. The length of your response should be a minimum of 150 words.

Individual Bankruptcy

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Individual Bankruptcy When individuals find that the financial circumstances in their lives have gotten unmanageable and debts far exceed income, one option that they may select is filing for personal bankruptcy. Although this may temporarily help with situation, there are also real, long-lasting consequences to filing for bankruptcy that also need to be considered. Consider the following scenario: Mary is a 30-year-old divorced woman. She got married at the age of 25, was married for approximately 4 years, and currently has a 3-year-old child. Mary is a financial analyst who earns approximately $60,000 per year. She has a combination of loans, credit card debt, and medical bills totaling $88,000. Her assets are worth $24,000. After reviewing this information, respond to the following: In general, what options are available to an individual in filing bankruptcy? What might affect the availability of these options for Mary? What other factors might Mary want to consider in making her decision to file bankruptcy? What recommendation would you make to Mary and why? With these thoughts in mind: Post an initial statement by Day 3 that expresses your thoughts on pursuing backruptcy. The length of your response should be a minimum of 150 words.
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Individual Bankruptcy

When people find themselves in overwhelming debts that they cannot manage, filing for bankruptcy can be a better way to get out of such debt. There are two options which are available to an individual when filling bankruptcy. The first option for filing bankruptcy is Chapter Seven bankruptcy. This option is also referred to as liquidation bankruptcy. In this option, an individual like Mary can have most, if not all of her dischargeable debts dismissed. In exchange, some of their assets may be sold to pay the creditors (Lee, 2007). 

     The second option of bankruptcy is called Chapter 13 bankruptcy. This option applies to both individuals and businesses. Chapter 13 bankruptcy helps individuals reorganize their debts into flexible repayment options. This method allows the debtors to pay off their debts for over some years. Depending on some factors, individuals may pay some, or all the amounts through their repayment plan (Lee, 2007).

     The availability of these two options to many can be a problem to Mary. This is because her disposable income may not be enough to repay the debts. The amount of the combined loan is much higher than her disposable income. 

Factors that Mary can consider in making her decisions.

  1.   She must make sure she is on the current filing system to file chapter 7.
  2.   Make sure that she has not filed chapter 13 in the past four years or chapter 7 in the last two years.
  3.   She must make sure that she is not a business entity.

 

Recommendations

Here is what I would recommend to Mary:

I would recommend her to attend a credit counselling before filing bankruptcy- credit counselling agencies can help her negotiate with the creditors, which can be stressful on her own. They can also help her create a realistic budget.

 

References

Lee, S. H., Peng, M. W., & Barney, J. B. (2007). Bankruptcy law and entrepreneurship 

 

Development: A real options perspective. Academy of Management Review, 32(1), 257-272.

 

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